supporting the tourism sector and communities to recover

COVERSHEET

Minister Hon Stuart Nash Portfolio Tourism

Title of Cabinet paper

Supporting the tourism sector and communities to recover and reset from COVID-19

Date to be published

3 June 2021

List of documents that have been proactively released

Date Title Author 7 April 2021 Supporting the tourism sector and communities

to recover and reset from COVID-19 Office of the Minister of Tourism

7 April 2021 DEV-21-MIN-0067 Cabinet Office

Information redacted YES

Some information has been redacted from this document to maintain the constitutional conventions for the time being which protect the confidentiality of advice tendered by Ministers of the Crown and officials.

Any information redacted in this document is redacted in accordance with MBIE’s policy on Proactive Release and is labelled with the reason for redaction. This may include information that would be redacted if this information was requested under Official Information Act 1982. Where this is the case, the reasons for withholding information are listed below. Where information has been withheld, no public interest has been identified that would outweigh the reasons for withholding it.

© Crown Copyright, Creative Commons Attribution 4.0 International (CC BY 4.0)

I N C O N F I D E N C E

In Confidence

Office of the Minister of Tourism

Cabinet Economic Development Committee

Supporting the tourism sector and communities to recover and reset from COVID-19

Proposal

1 This paper seeks agreement to support for those communities that are most reliant on international tourism (Kaikōura, Mackenzie, Queenstown Lakes, Fiordland1 and South Westland2), and the businesses that are part of those communities. The paper also seeks agreement to support for the tourism sector nationwide, to enable the re-set of tourism in response to COVID-19 to be more sustainable and resilient.

Relation to government priorities

2 The package supports the Government’s priorities in the Labour Manifesto 2020 to:

2.1 support a social and economic recovery from the impacts of COVID-19, including future-proofing our economy and supporting small businesses and entrepreneurs to adapt, recover and grow

2.2 restart and reimagine a more sustainable tourism industry by working with the industry

2.3 grow the economy sustainably by making long-term investments necessary to secure New Zealand’s economic future

2.4 partner with communities, iwi and local government.

3 The package is underpinned by the principles and objectives of the New Zealand-Aotearoa Government Tourism Strategy, such as taking an all-of-government approach to the tourism system and working in partnership with local communities.

4 The package aligns with my intentions for the direction of tourism in New Zealand, as agreed by Cabinet on 15 March 2021, including resetting and rebuilding tourism on a sustainable model, and partnering with industry, businesses and workers to achieve the transition [DEV-21-MIN-0025 refers]. It is a key part of our regional development strategy and economic recovery.

Executive Summary

COVID-19 continues to have a significant negative effect on the tourism sector. Measures to prevent the spread of COVID-19, including changes to our border settings, while protecting New Zealanders, have dramatically reduced international visitor arrivals and spend. This has caused a shock not only to the tourism industry, but across the broader economy. Prior to COVID-19, international visitors contributed $17 billion in GDP and comprised 40 per cent of tourism expenditure in New Zealand.

1 Which includes Te Anau and Milford Sound, and is part of Southland district 2 Which includes Glacier Country, and is part of Westland district


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1

6

7

8

9


This has been felt particularly strongly by some communities that have been highly reliant on international tourism. There is an urgent need for support for these communities to minimise long-term economic and social scarring.

I have identified the following five communities as being in particular need of support: Kaikōura, Mackenzie, Queenstown Lakes, Fiordland, and South Westland. Other communities have been hit hard too by the loss of international tourism; however, there is a clear case for a targeted approach to support these five communities.

I seek your agreement to a package of support that includes thirteen initiatives. The first four are targeted solely at these five communities and the businesses within them; the fifth focusses upon Fiordland, the sixth focusses upon Queenstown Lakes District, and the remaining six are to be rolled out nationwide. These initiatives are:

8.1 place-based psychosocial support to promote and protect the social and mental wellbeing of these communities

8.2 business advisory support, to enable business operators in these communities to make astute business decisions

8.3 grants for businesses to enable business operators in these communities to implement the advice received through the initiative at 8.2

8.4 a tourism kick-start fund to enable existing tourism businesses in these communities to reopen once international visitors return

8.5 funding for the next phase of the Milford Opportunities Project, which will redevelop Milford Sound to increase the sustainability and quality of visitors’ experiences

8.6 an underwriting fund to support Queenstown Lake District’s economic transformation and resilience

8.7 grants to Regional Tourism Organisations (RTOs) nationwide, to enable regions to increase their ability to lead and coordinate local destination management.

8.8 Development and initial implementation of a Tourism Industry Transformation Plan, to take action in response to the findings of the reports of the Parliamentary Commissioner for the Environment, the Tourism Futures Taskforce, and the Climate Change Commission

8.9

8.10

Confidential advice to Government


8.11 conversion of the loans provided to Inbound Tour Operators (ITOs) to grants (up to $0.5 million per ITO), consistent with the approach to other strategic tourism assets

8.12 a sixth funding round of the Tourism Infrastructure Fund

The package will cost a total of $200 million. I propose that the package be funded from the COVID-19 Response and Recovery Fund.


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Background

10 While New Zealand’s broader economy is navigating the shock of COVID-19 better than expected, COVID-19 continues to have a significant negative effect on the tourism sector. Prior to COVID-19, international visitors contributed $17 billion to New Zealand’s economy and comprised 40 per cent of tourism expenditure. Measures to prevent the spread of COVID-19 (including border restrictions both in New Zealand and overseas) have dramatically reduced these figures, causing a shock to the tourism industry that is having impacts across the broader economy.

11 We have made an historic level of investment into the tourism sector to reduce the economic impact of COVID-19 including the $400 million Tourism Recovery Package [CAB-20-MIN-0219 refers]. Broad-based government support for businesses affected by COVID-19 such as the wage subsidy scheme and COVID-19 income relief payments have been widely utilised by the tourism sector. We have also invested in marketing campaigns to encourage New Zealanders to travel domestically.

12 While there is evidence that government support and the marketing campaigns have increased domestic tourism spending in some communities over the summer period, this will not compensate for the usual revenue generated by international tourism. The impact of COVID-19 on the tourism industry and the flow-on effects to the wider economy will be felt particularly acutely in the coming months.

13 New Zealand’s tourism industry makes most of its money during the summer season. While domestic tourism has increased on previous years, it is not sufficient to make up for the missing international tourism, which generates revenue through until Easter. In a typical year, the profits of summer sustain businesses through the winter. The shorter summer season and revenue decrease is causing significant hardship for some tourism businesses, their employees, and the communities they operate in.

14 It is uncertain when international tourism will resume, and to what extent. Industry commentators have suggested that international tourism is likely to be reduced for at least the next 12 months and possibly for up to five years. This is as a result of New Zealand and global border restrictions, consequences on international air connectivity and consumers’ desire to travel, as well as the potential global economic downturn.

15 The introduction of two-way quarantine-free travel with Australia, when safe to do so, will be a significant boost for the tourism industry, but not a solution. In the year-ended December 2019, 10% of all tourism spending was by visitors from Australia; rising to 23% when domestic spending is excluded. In Queenstown Lakes District, the proportion of tourism spending by Australians was far higher at 20% of all tourism spend and 31% of international tourism spend.

16 However, the first travellers from Australia once quarantine-free travel is introduced are more likely to be people with ties to New Zealand, coming here to visit their friends and relatives. These initial travellers may be less likely to visit and spend in these five communities than the usual pre-COVID-19 Australian tourist demographic, which includes leisure travel. Additionally, traditional Australian travel patterns mirror the seasonal travel of domestic visitors, with a sharp peak over December that drops steeply from February. Therefore, I consider a package of support to be necessary regardless of when two-way quarantine-free travel with Australia is introduced.


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I have identified five tourism-reliant communities in need of urgent support

17 There are communities in New Zealand that have been particularly affected because they have a high degree of reliance on international tourism with limited alternative employment and entrepreneurial opportunities. As a result, the effects on the tourism industry have spread to impact the broader local community and other industries. This includes impacts on basic community services, such as grocery retail businesses and voluntary fire services.

18 I have identified the following five communities as being in particular need of support: Kaikōura, Mackenzie, Queenstown Lakes, Fiordland and South Westland. This is on the basis that these districts’ economies rely substantially upon the international tourism industry. Prior to COVID-19, more than 50 per cent of tourism spending within these communities was by international visitors. Total spending within these communities, across all industries, has declined by at least 15 per cent since this same time last year. Annex One includes data demonstrating these communities’ reliance on international tourism, as well as a few selected other communities such as Rotorua, Christchurch city and Northland.

Heat map of decline in consumer spend nationwide, week ended 14 March 2021 compared with week ended 14 March 2020

19 The loss of international visitors in these communities has not been filled by the increase in domestic travel and expenditure nationwide by New Zealanders. This is despite an increase in New Zealanders’ spending on domestic tourism beyond their


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usual holiday spending, achieved in part through targeted campaigns by Tourism New Zealand and through support to Regional Tourism Organisations.

Support is also required to enable the tourism system nationwide to recover and reset

20 In addition to these five communities, the loss of international tourism has also had an acute effect on some parts of the tourism sector and tourism institutions

21 Cabinet has agreed to my direction for the tourism portfolio, which focusses upon building back a system that is more sustainable and delivers on Brand New Zealand [CAB-21-MIN-0025 refers]. Visitor growth prior to COVID-19 was unsustainable. International tourism can deliver more for our environment and communities. We have an opportunity now, while the borders are closed to re-shape tourism so that when we re-open, visitors, industry and host communities are operating on a better model. We want out tourism industry to be productive, sustainable and inclusive.

I have developed a package of support

22 Further support for tourism requires a structural and targeted approach that goes to the heart of business operations and communities for those who need it most. The package also has elements of national support to support the re-set of tourism to be more sustainable as New Zealand re-opens borders.

23 The package will:

23.1 enable tourism businesses to make hard decisions around their current operations on the basis of expert advice

23.2 enable tourism businesses to respond rapidly once borders reopen

23.3 support people through this period of uncertainty and change

23.4 diversify these local economies to improve their long-term resilience

23.5 re-set the tourism sector to be more sustainable and resilient in response to COVID-19.

24 The package includes the following twelve initiatives:

Target Initiative Total cost Policy settings

nationwide; often because it is harder to transition to a focus on the domestic tourist market.

Inbound Tour Operators, which attract international visitors, have also been highly affected.


Five 1. Place-based psychosocial support communities Confidential advice to Government

Five communities

2. Business advisory support3 , which would enable businesses to receive advice on whether to change their business to target a different market, down-scale their tourism business, or exit the market. Funding up to $5,000 per tourism business in the five communities

10.000

3 This initiative is demand-driven, so the exact quantum of funding required is estimated.

I N C O N F I D E N C E 5

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4.500




Nation-wide 11. Conversion of Inbound Tour Operator loans to grants (up to $0.5 million per ITO) to maintain sector capacity and international market presence by converting existing loans to grants. This is consistent with the approach to other strategic tourism assets.

Five communities

Five communities

Te Anau / Milford with spinoffs nationally

Primarily Queenstown

Nation-wide

Nation-wide

Nation-wide

Nation-wide

Nation-wide

3. Grants for businesses to implement advice,4 which would enable businesses to implement the advice received through the business

10.000 advisory service. $5,000 grant per tourism business in the five communities

4. Tourism kick-start fund5, to boost existing tourism businesses once international visitors return Business advice on hibernation and two weeks of pre-COVID

49.000 revenue to tourism businesses in the five communities that engaged in hibernation-related activities, including $2.5 million for administration

5. Milford Opportunities Project, to fund the next phase of the fundamental redevelopment of Milford Sound and the surrounding

15.000

6. Queenstown Economic Transformation and Resilience underwriting fund, to promote the development of alternative industries in Queenstown to increase its resilience. 20.000

7. Further one-year grants to all RTOs, which would enable regions to increase their ability to lead and coordinate tourism activities in their regions. 26.000 Figures on the basis of STAPP RTO funding, adjusted to reflect evaluation

8. Tourism Industry Transformation Plan (development and initial implementation) to address the findings of the PCE report,

10.000 Taskforce report, aspects of the Government and Industry Tourism Strategies, and the report of the Climate Change Commission.

9.

15.000

10.

10.000

14.000

region to protect the local environment, and increase the sustainability and quality of visitors’ experiences. Confidential

advice to

12. Tourism Infrastructure Fund, to run a sixth round of the Fund which will be used to fund essential tourism infrastructure 16.500 nationwide

Total cost of package 200.000

Explanation of the package

Initiatives 1-4: Community-focussed support

25 The package includes support that would be limited to these five communities. It offers psycho-social support, in recognition of the challenges and degree of change

4 As above. 5 As above.


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people are facing. It also includes support for businesses in these communities to make the hard choices, including closing (and preserving capital), re-orienting to adjacent business activities, and/or improving efficiency of business operations. The package also includes a kick-start fund, to enable firms that have hibernated or suspended operations to get back up to scale quickly. This package is urgent and will be delivered as soon as feasibly possible.

Initiative 5: Milford Opportunities Project

26 The Milford Opportunities Project would receive $15 million under this package. It is a multi-agency approach to establish how visitors are managed into the future at Milford Sound Piopiotahi and along the Milford Road corridor.

27 This will go towards efforts to manage future visitor numbers in a sustainable manner, which had been increasing significantly year-on-year. It will account for recreational users and their requirements, the importance of the local environment, and the various modes of transport people use to access Milford. To this end, the eventual objective of the project is that it would fund significant infrastructure projects to ensure Milford is resilient to the changing climate and dynamic hazard landscape.

28 The project is currently considering the following work:

28.1 using tourism to contribute to conservation, access, infrastructure, operations and mana whenua related costs

28.2 developing new transport models to manage visitor flows

28.3 developing a compelling suite of experiences in Piopiotahi and the Milford corridor to encourage visitors to stay longer and contribute to the local economy

28.4 redesigning the Milford Village to lift the quality of the built environment and reflect its world-class status

28.5 developing Te Anau as a sub-regional visitor hub, and strengthening the local offering to encourage more visitors to stay overnight.

Initiative 6: Queenstown Economic Transformation and Resilience underwriting fund

29 The Queenstown Lakes District is currently reliant on a few key industries leaving the economy particularly vulnerable to external forces. In addition to investment in key infrastructure, there is an opportunity to accelerate the local economic development actions. There are a number of potential projects in the pipeline, such as the development of a digital technology hub and support for film sector infrastructure. Support will likely take the form of an underwrite or guarantee for private sector investment. Queenstown Lakes is particularly reliant on international visitors, and therefore supporting the development of other sectors is a key step in improving the resilience of the District.

Initiative 7: Further grants to Regional Tourism Organisations (RTOs)

30 RTOs play an important role in supporting the tourism system. The tourism sector depends upon RTOs to lead and coordinate tourism-related activities in their regions, alongside the tourism industry, stakeholders, Māori/iwi and communities.


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31 As part of the Strategic Tourism Asset Protection Programme (STAPP), $20.2 million in grants was allocated to the 31 RTOs across New Zealand to support them to implement destination management and planning, and encourage New Zealanders to explore the regions, including by leveraging Tourism New Zealand’s domestic campaign. I have seen positive outcomes and received positive feedback as a result of the funding.

32 The current STAPP RTO funding was provided to support domestic marketing, industry capacity building, product development, and destination management and planning. Without additional government funding to RTOs, this work is likely to slow. This is because RTOs’ funding models depend upon contributions from the local tourism industry and local government, which are diminished due to the loss of international tourism. STAPP funding only provided support for one year as an immediate response.

33 I propose providing an additional year of RTO funding, and slightly changing the tiered approach to funding to better reflect the variety of RTO sizes. This funding will enable RTOs to extend their programme of activity while borders remain closed, and accelerate the destination management and planning activities, ensuring that we build tourism back to be more socially, financially, and environmentally sustainable and resilient. It will also support a faster restart once international visitors return by retaining local strategic capability.

34 The current RTO funding was contracted until August 2021, so the further year of funding will be provided in the 2021/22 financial year.

Initiatives 8: Development and initial implementation of a Tourism Industry Transformation Plan (ITP)

35 This fund will enable the collaboration between the private sector, researchers, and workers to develop and trial solutions that could lead to system-wide innovation and improvements directly aligned with government goals to transform tourism.

36

Initiative 9:

37

38





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39

40


Initiative 10: Confidential advice to Government

41

42

43

44



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45


Initiative 11: Converting government loans to grants for strategic Inbound Tour Operators

46 Twenty-five Inbound Tour Operators (ITOs), or around a quarter of ITOs received loans through the Tourism Recovery Package. I propose converting up to $0.5 million per ITO to grant funding, to mirror the support that was provided to other strategic tourism assets through the Strategic Tourism Asset Protection Programme.

47 This initiative costs $12.250m to forgive the loans and issue grants in their place, plus $1.1 million in lost interest revenue.

Initiative 12: Further round of the Tourism Infrastructure Fund

48 The Tourism Infrastructure Fund was a four-year fund to develop tourism-related infrastructure that supports regions facing pressure from tourism growth. The fifth (and final) round of the Tourism Infrastructure Fund is due to open this year for competitive applications for funding. I propose running a further sixth round of the Tourism Infrastructure Fund next year to support communities’ preparation for the return of international tourism.

Timeframe for implementation

49 Delivery of this package is urgent due to the acute pressure faced by the tourism sector and communities that are highly reliant on international tourism.

50 The table overleaf indicates my preferred timing and sequencing for the implementation of these initiatives. Overall, I envisage 85% of the funds being deployed in the next 15 months.

10 I N C O N F I D E N C E

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Phasing of the initiatives within the package

Key Initiative in-full force Initiative fully underway but anticipated demand to be at a lower level Initiative underway but funded through other sources

FY 2020/21

FY 2021/22 FY 2022/23

Apr - Jun 2021

Jul - Sep 2021

Oct - Dec 2021

Jan - Mar 2022

Apr - Jun 2022

Jul - Sep 2022

Oct - Dec 2022

Jan - Mar 2023

Apr - Jun 2023

1. Place-based psychosocial support

2. Business advisory support

3. Business advice implementation grants

4. Tourism kick-start fund (timing dependent upon global context)

5. Milford Opportunities Project

6. Queenstown Economic Transformation and Resilience Fund 7. RTO grants Currently

funded 8. Development of an Industry Training Plan

Further funding for implementation of the ITP could be sourced from the International Visitor Levy

9.

10. DOC concessions waiver Currently funded

11. ITO loans to grants

12. Tourism Infrastructure Fund Currently funded



Confidential advice to Government Confidential advice to Government


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I propose that the package be funded from the COVID-19 Response and Recovery Fund

51 The package will cost a total of $200 million, with most initiatives appropriated as a three-year appropriation from 2020/21 to 2022/23.

52 I consider that the package meets the objectives of the COVID-19 Response and Recovery Fund (CRRF). Cabinet has agreed that initiatives funded from the CRRF should demonstrate that:

52.1 funding is needed as a direct result of COVID-19

52.2 funding is needed outside of the normal budget cycle to support the response and/or recovery from COVID-19

52.3 the additional costs cannot be managed from existing baselines [CAB-20-MIN-0219 refers].

53 The package meets all three criteria. It is designed specifically for the purpose of reducing long-term economic and social scarring in tourism-reliant communities and the tourism sector as a direct result of the loss of international tourism caused by COVID-19. The package must be delivered urgently due to the pressing need within these communities to minimise immediate and long-term harm, and therefore cannot be delivered through the normal budget cycle. The package is substantial in comparison to baselines within the Tourism portfolio, and therefore cannot be managed from existing baselines.

The package takes an all-of-government approach and aligns with other government initiatives

54 As the package is focussed upon supporting whole communities that have been reliant on international tourism, rather than just tourism businesses, it is essential that its implementation takes an all-of-government approach. The package has been developed collaboratively across government agencies, and complements existing initiatives.

55 In particular, it complements the work of the Provincial Development Unit, such as supporting priorities identified through regional economic development planning processes through the Regional Strategic Partnership Fund; the work of Regional Skills Leadership Groups to support the development of regional workforce plans; the Jobs for Nature initiative; tourism destination management; and broad-based business and employment support that the government has implemented in response to COVID-19. Confidential advice to Government

56 Keeping COVID-19 out of New Zealand is the most effective action to support the tourism sector. Because of the low prevalence of COVID-19 in New Zealand, consumer confidence is higher in New Zealand than in many other comparable countries. Other actions to support the tourism industry include: establishing quarantine-free travel between Australia when it is safe to do so, retaining international air connectivity, maintaining a brand presence overseas, and ensuring that border settings enable the return of international visitors, when it is safe to do so.


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Risks

57 COVID-19 has had economic effects across New Zealand, and there will be other communities looking for economic support, including those that are experiencing impacts from the loss of international tourism. I have further work underway within the Economic and Regional Development portfolio that will support other regions and communities.

58 For both packages, I have targeted these five communities because of their substantial reliance on international tourism, and the risk to the sustainability and resilience of social and economic wellbeing in these communities. The issues facing these communities are particularly urgent because of the share of employment and businesses that rely on international tourism, and the consequential risk of long-term economic and social scarring.

59 The delivery mechanisms, implementation details, and detailed criteria for each initiative are still to be finalised. Many of the initiatives within both packages are demand driven, and high-level assumptions have been made about likely demand and uptake. These costs, and the consequential administration costs, may change once the detailed design is undertaken and demand becomes evident. Costs will be managed within the approved total.

Financial Implications

60 The total for the package is $199.850 million. I propose the package is funded from the COVID-19 Response and Recovery Fund.

Legislative Implications

61 There are no legislative implications resulting from this proposal.

Population Implications

62 The package is expected to positively affect the populations residing within the five identified communities. I do not anticipate any negative impacts on particular population groups as a result of this proposal.

Human Rights

63 This proposal is consistent with the New Zealand Bill of Rights Act 1990 and the Human Rights Act 1993.

Consultation

64 The Ministry of Business, Innovation and Employment consulted the following agencies in the development of this Cabinet paper: the Treasury, Inland Revenue, Tourism New Zealand, Department of Conservation, Te Puni Kōkiri, Ministry of Health, Ministry for Primary Industries, Ministry of Social Development, Ministry of Education, the Department of Internal Affairs and the Department of Prime Minister and Cabinet.

Communications

65 I intend to announce the package following Cabinet confirmation. I will coordinate with the office of the Prime Minister for the timing and content of this announcement.


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Proactive Release

66 I intend to proactively release this paper and the Cabinet minute within 30 business days of Cabinet’s decisions. The release will be subject to redaction as appropriate under the Official Information Act 1982.

Recommendations

As the Minister of Tourism, I recommend that the Committee:

1 Note that, in March 2021, I sought Cabinet’s agreement to my direction for the tourism portfolio, which included supporting tourism-reliant communities to navigate the impacts of COVID-19 [DEV-21-MIN-0025 refers]

2 Agree to a two-part tourism recovery package to support:

2.1 the following five communities that have been identified as being under acute pressure due to their reliance on international tourism: Kaikōura, Mackenzie, Queenstown Lakes, Fiordland6 and South Westland7

2.2 the tourism sector to recover and re-set nationally.

3 Agree to the following package of support for these communities that are under acute pressure because of their high reliance on international tourism:

Cost ($m)

Initiative

Policy settings

1. Place-based psychosocial support Confidential advice to Government

2020/21 to 2022/23

4.500

2023/24 2024/2 Total 5 and out-

years

- - 4.500

2. Business advisory support8, which would enable businesses to receive advice on whether to change their business to target a different market, down-scale their tourism business, or exit the market.

Funding up to $5,000 per tourism business in the five communities

10.000 - - 10.000

6 Which includes Te Anau and Milford Sound, and is part of the Southland district 7 Which includes Glacier Country, and is part of the Westland district 8 This initiative is demand-driven, so the exact quantum of funding required is estimated.


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3. Grants for businesses to implement advice9 , which would enable businesses to implement the advice received through the business advisory service.

$5,000 grant per tourism business in the five communities

4. Tourism kick-start fund, 10to boost existing tourism businesses once international visitors return

Business advice on hibernation and two weeks of pre-COVID revenue to tourism businesses in the five communities that engaged in hibernation-related activities, including $2.5 million for administration

5. Milford OpportunitiesProject, to fund the next phase of the fundamental redevelopment of Milford Sound and the surrounding region to protect the local environment, and increase the sustainability and quality of visitors’

10.000 - - 10.000

49.000 - - 49.000

15.000 - - 15.000

experiences. Confidential advice to

6. Queenstown Economic Transformation and Resilience fund, to underwrite projects that will develop alternative industries within the 19.200 0.400 0.400 20.000 Queenstown Lakes District and surrounding areas. Includes $0.400 million each year for departmental funding.

Total 107.700 0.400 0.400 108.500

4 Agree to the following package for the tourism sector to recover and re-set nationally:

9 This initiative is demand-driven, so the exact quantum of funding required is estimated. 10 As above.


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Initiative

Policy settings

7. Further one-year grants to all RTOs, which would enable regions to increase their ability to lead and coordinate tourism activities in their regions.

Figures on the basis of STAPP RTO funding, adjusted to reflect evaluation

8. Tourism IndustryTransformation Plan (development and initial implementation)to address the findings of the PCE report, Taskforce report, aspects of the Government and Industry Tourism Strategies, and the report of the Climate Change Commission. This Confidential advice to Government

Costings lower than the $15 million required for the Construction Industry Transformation Plan

2020/21

-

-

Cost ($m)

2021/22

26.000

10.000

2022/23 2023/24 Total

- - 26.000

- - 10.000

9.

- 7.500 7.500 - 15.000



10.

- 10.000 - - 10.000

11. Inbound Tour Operators, to maintain sector capacity and international market presence by converting up to $0.5 million per existing ITO loan to a grant, consistent with the approach to other strategic tourism assets. This initiative is fiscally neutral.

22.500 (8.500) - - 14.000

12. Tourism Infrastructure Fund, to run a sixth round of the Fund which will be used to fund - 16.500 - - 16.500 essential tourism infrastructure nationwide


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Total 22.500 61.500 7.500 0.000 91.500

5 Note that the total cost of the package is $200 million, as shown below:

$ million

2020/21 2021/22 2022/23 2023/24 2024/25and out-years

Total

Community-focussed initiatives

26.400 60.900 20.400 0.400 0.400 108.5

Nation-wide initiatives 22.500 61.500 7.500 0.000 0.000 91.500

Total 48.900 122.400 27.900 0.400 0.400 200.000

6 Note that on 11 May 2020, Cabinet agreed to establish tagged operating and capital contingencies of $50 billion to support a response to and recovery from COVID-19, called the COVID-19 Response and Recovery Fund [CAB-20-MIN-0219 refers].

7 Agree that this package be funded from the COVID-19 Response and Recovery Fund.

8 Agree to establish the following new multi-year appropriations, to run from 1 April 2021 to 30 June 2023:

Vote Appropriation Minister

Title Type Scope

Business, Science and Innovation

Minister of Tourism

Tourism: Recovery from COVID-19 2021-2023

Non-Departmental Other Expenses

This appropriation is limited to support packages for those communities that are most reliant on international tourism

9 Approve the following changes to appropriations to provide for a two-part support, recovery and reset package, with a corresponding impact on the operating balance net core Crown debt:

$m - increase/(decrease)

Vote: Business, Science and Innovation

Minister of Tourism

2020/21 to 2022/23 2023/24 &

Outyears

Non-Departmental Other Expenses:

Tourism: Tourism- community recovery from COVID-19 2021-2023 (MYA)

86.000 -


2020/21 2021/22 2022/23 2023/24 2024/25 & outyears

Vote: Business, Science and


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- -

- -

- -

- -

- -

- -

- -

- -


Innovation

Minister of Tourism

Non-departmental Other Expenses:

Tourism Infrastructure Fund

Non-Departmental Output Expenses:

COVID-19 Tourism Response

Multi-Category Expenses and Capital Expenditure:Policy Advice and Related Services to Ministers MCA

Departmental Output Expenses: Policy Advice and Related Services to Ministers - Tourism

(funded by revenue Crown)

Vote: Business, Science and Innovation Minister for Economic and RegionalDevelopment Non-Departmental Output Expenses:Economic Development: Industry Transformation Plans Provincial Growth Fund Investment Management Non-Departmental Capital Expense: Tourism Investment Provincial Growth Fund Limited Vote Māori Development

-

-

-

-

0.400

18.000

16.500

26.000

1.500

10.000

0.400

-

-

-

1.000

-

0.400

-

0.400 0.400

Minister for Māori Development Confidential advice to Government

Vote: Conservation Minister of Conservation

Total Operating

Total Capital

-

-

0.400

18.000

7.500

10.000

71.900

-

7.500

-

8.900

-

0.400 0.400


10 Note that the recommendation to convert Inbound Tourism Operator (ITO) loans to grants (up to $0.5 million per ITO loan) will have an:

10.1 Impact of $12.250 million to OBEGAL, representing the cost of converting the loans to grants

10.2 Future impact on net core Crown debt of $12.350 million from foregoing repayments of principal ($12.250 million) and interest ($1.100 million)

11 Agree that up to $0.5 million per ITO loan can be repaid to MBIE as a payment against the loan principal and that repayment can then be repurposed and paid back to the ITO as a grant.


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12 Note that no interest will be incurred on these loans before the repayment date.

13 Authorise the Minister of Tourism and the Minister of Finance to jointly agree to increase the Strategic Tourism Asset Protection Programme appropriation by the amount returned from ITOs, to the re=purpose to use as a grant payment.

14 Approve the following changes to appropriations to provide for the conversion of ITO loans to grants (up to $0.5 million per ITO) with a corresponding impact on the operating balance and net core Crown debt:


2020/21 2021/22 2022/23 2023/24 2024/25 &Outyears

Vote Business, Science and Innovation Minister for Economic and Regional Development

Non-Departmental Capital Expense:

Tourism Capital Investment

Minister of Tourism

Non-Departmental Other Expense:

COVID-19 tourism response

(1.000)

23.500

(8.500)

0.000

-

-

-

-

-

-

Total Operating 23.500 - - - -

Total Capital (1.000) (8.500) - - -

15 Agree that the proposed changes to appropriations above be included in the 2020/21 Supplementary Estimates and that, in the interim, be met from Imprest Supply.

16 Agree that any under-expenditure for the components within this package of initiatives be carried forward at the end of the financial year to the following financial year, in the same appropriation to recognise the uncertain timing of changes to the global and domestic tourism context, and subsequent project initiation and expenditure. This is subject to confirmation in a subsequent baseline update.

Authorised for lodgement

Hon Stuart Nash

Minister of Tourism


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Annex One: Data demonstrating communities’ reliance on international tourism

There are five communities struggling disproportionately from other communities as they are highly reliant on international visitors. That is, a high share of local GDP is historically tourism related (criteria a), and a large share of tourism spending is by international visitors (criteria b)

The result of the loss of that income is then having significant impacts on consumer spending across other sectors in those communities (criteria c).

Reliance of local economy on tourism

Overall impact ofCOVID-19 on local economy.

District

Criteria A: Percentage ofregion’sexpenditure that was on tourism, 2019 is more than 10%

Criteria B: Proportion of tourism spendingin the district that was byinternational visitors, 2019, is more than 50%

Criteria C: Percentagedecrease in consumer spending across all industries in the district for year January2020-2021)[1] is more than -10%

Kaikōura 11 52 -14

Mackenzie 11 69 -35

Queenstown Lakes

30 65 -32

Southland (whichincludes Te Anau and Milford Sound

11 58 -22

Westland (whichincludes Glacier Country)

28 65 -29

Auckland 7 55 -6

Rotorua 10 42 -8

Christchurch City 11 41 -8

Far North 14 31 3

Whangārei 14 17 1

Kaipara 14 10 5

All of New Zealand

10 41 -5

[1][1] Ministry of Business, Innovation and Employment: Consumer Spending Dashboard – COVID-19 response regional spend


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20

supporting the tourism sector and communities to recover

Documents